Hardy Exploration & Production (India) Inc v Government of India

A third party debt order requires the third party to be within the jurisdiction and the attached debt to be situated in England and Wales, unless the law of a foreign situs would recognise the English order as discharging the debt. A debt is generally situated where it is properly recoverable or enforceable. Residence of the debtor is only a general presumption, which may be displaced by an exclusive jurisdiction or similar agreement. Before a debt has been established by judgment or award, situs concerns the court competent to determine its existence and extent. A debt is “due or accruing due” only where there is an immediate and unconditional obligation to pay, although payment may be deferred. The order should also be refused where there is a real or substantial risk of double liability.

Hardy had obtained an arbitration award against the Government of India and an English enforcement order. It then obtained an interim third party debt order against India Infrastructure Finance Company (UK) Ltd in respect of guarantee fees allegedly owed to the Government of India.

The third party applied to discharge the interim order. The issues determined were whether the guarantee-fee debt was situated in England and Wales, whether compliance with an English order would discharge the debt under Indian law, and whether the debt was “due or accruing due” when the interim order was made or served.

1. Ground 2 allowed. A third party debt order could be made only if the third party was within the jurisdiction and the debt was situated within England and Wales, subject to the foreign-situs exception recognised in Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30; [2004] 1 AC 260 and Taurus Petroleum Ltd v State Oil Marketing Co of the Ministry of Oil, Iraq [2017] UKSC 64; [2017] 3 WLR 1170.
2. The situs of a debt is generally the place where it is properly recoverable or enforceable. The usual residence-based presumption may be displaced where the contract gives another jurisdiction an exclusive or special right to determine the debt. The guarantee-fee agreements contained an exclusive Delhi jurisdiction clause. The debt was therefore situated in India.
3. The evidence established at least a real or substantial risk that an Indian court or tribunal would not recognise compliance with the English order as discharging the debt. If jurisdiction had existed, the court would accordingly have exercised its discretion against making the order.
4. The guarantee fee payable on 1 April 2018 was not an existing debt on 28 February or 5 March 2018. The agreements imposed an obligation to pay on 1 April, and entitlement depended on the borrowing and accumulated interest then outstanding. There was no immediate and unconditional obligation at the relevant dates.
5. The interim third party debt order was discharged. The court awaited submissions on consequential orders.